AGL calls halt to wind farm investment

AGL Energy
has called a halt to its investments in new wind farms because of the low price of renewable energy certificates, with the hiatus in new projects likely to last a couple of years.

While AGL will continue with investments already underway, it will not commit to any new wind projects until the price of RECs recovers, managing director
Michael Fraser
said Wednesday on the interim earnings teleconference.

That leaves development projects such as the 150 megawatt Barn Hill and 99 megawatt Hallett 3 projects in South Australia and the 300 megawatt Coopers Gap project in Queensland on hold.

Mr Fraser blamed the “soft and soggy" market for RECs to an oversupply of credits because of the inclusion in the original scheme of heavily subsidised household solar systems.

Prices for RECs, each of which represent 1 megawatt-hour of renewable power generation, are trading in the low $30s, while Mr Fraser estimates a price double that would be required to stimulate investment in new wind farms.

While the REC scheme has since been modified to separate small-scale renewable energy systems from large-scale plants it may take until 2014 or 2015 before the oversupply of RECs in the market clears, he said. AGL itself has taken advantage of the low price of RECs to build up stockpiles so its obligations are covered until 2014-15.

The effect of the softness in the REC market on the renewable energy industry has been amplified by the absence of a price on carbon pollution, Mr Fraser added.